Institutional Investments Fuel UAE Stocks in 2023


Data from the Abu Dhabi and Dubai markets reveals that institutional investors achieved a net purchase of nearly AED 7 billion (US$1.9 billion) in local stocks from January to December 2023….reports Asian Lite News

Institutional investors have notably boosted their acquisition of domestic stocks in 2023, enticed by the diverse investment prospects and the opportunity to engage in the strong expansion of the country’s economy. Furthermore, prominent global and regional institutions consider local listed companies highly attractive for their investment strategies.

Data from the Abu Dhabi and Dubai markets reveals that institutional investors achieved a net purchase of nearly AED 7 billion (US$1.9 billion) in local stocks from January to December 2023. This figure reflects a total purchase of AED 302.7 billion compared to total sales of approximately AED 295.8 billion.

The substantial rise in institutional investment in local equities underscores strong confidence in UAE markets, their promising future growth prospects, and the attractive investment opportunities they offer due to the country’s solid economic foundations and the impressive performance of its operating companies. This surge in institutional interest coincides with ongoing efforts by the markets to attract more foreign and institutional investments, aiming to diversify liquidity across local, foreign, institutional, and individual investors.

Institutional investors dominated the UAE equity market in 2023, capturing nearly 78 percent of total trading activity. This significant buy-in from institutional players demonstrates their heightened confidence in the UAE’s economic prospects, driven by the diversification of investment opportunities and compelling performance of listed national companies.

In the Abu Dhabi Securities Exchange (ADX), institutional investors achieved a net investment exceeding AED 6.1 billion year-to-date. This robust appetite was fuelled by cumulative purchases of AED 253.9 billion, marginally exceeding sales of AED 247.8 billion.

The highest net purchase value in the ADX was recorded in February, reaching approximately AED 2.3 billion, followed by AED 100.3 million in January, AED 1.02 billion in March, AED 587.1 million in April, AED 566.7 million in May, AED 680 million in June, AED 759.8 million in July, AED 187.04 million in August, AED 293.3 million in September, AED 132.4 million in October, and AED 254.9 million in November.

In the Dubai Financial Market, institutional investment achieved a net purchase value of AED808.1 million.

The local financial markets expect increased institutional investments in the upcoming months. This is due to the numerous investment opportunities available in shares of financially stable companies, which are trading at appealing price levels for both local and foreign portfolios.

The country’s financial markets are collaborating with listed companies and international investment banks to host global investor conferences. The goal is to bolster connections, review business advancements, and discuss growth strategies with global investment institutions. This effort ensures open communication channels, sustaining a strong presence of institutional and foreign investments in the markets.

Insurance Sector Booms

The insurance sector in the UAE witnessed growth and expansion across various key indicators during 2022, according to a report by the Central Bank of the UAE, reflecting a strong, dynamic, and active market driven by increasing demand and effective risk management.

This will help bolster the market’s liquidity and make it more resistant to any future downturns, according to the apex bank’s annual statistical report on the insurance sector.

The Central Bank pointed out that the insurance sector in the UAE achieved growth in most of the key performance indicators in 2022, with Gross written premium increasing by 6.6% year-on-year to reach AED 47.2 billion.

The report explained that the number of direct premiums written grew by 11.2% year-on-year to 9.8 million in 2022, indicating the growth of the insured base and increasing market penetration rates. Total claims paid also increased by 4% to AED27.7 billion, which suggests a similar increase in the utilisation of insurance coverage and services, reflecting a dynamic and active market.

The retention ratio of written insurance premiums, according to the report, was 54.9%; technical provisions amounted to AED 68.6 billion; and total invested assets amounted to AED71.4 billion. In line with these developments, the number of new licenses for insurance-related professions increased by 6.3% in 2022.

In summary, the insurance sector in the UAE continued to grow and expand in 2022, driven by a number of factors, including increasing demand, effective risk management, and the growth of the economy. This growth is expected to continue in the coming years, as the UAE remains a strong and dynamic market for insurance.

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